Ascott REIT's 2Q 2016 Unitholders' Distribution Grows 9% To S$35.0 Million Bolstered By Acquisitions
Distribution per unit rises 2% to 2.13 cents
Singapore, 20 July 2016 – Ascott Residence Trust’s (Ascott Reit) Unitholders’ distribution for 2Q 2016 rose 9% year-on-year to S$35.0 million and distribution per unit (DPU) went up 2% to 2.13 cents. The increase was due to higher revenue which grew 21% to S$119.4 million, mainly contributed by Ascott Reit’s acquisitions in 2015 and 2016. Revenue per available unit (RevPAU) climbed 10% to S$142. Gross profit gained 17% to S$57.9 million.
Ascott Reit’s 2Q 2016 DPU would increase by 3% to 2.16 cents if the effect of its equity placement in March 2016 was excluded. Ascott Reit raised S$100 million through the equity placement by issuing 94.8 million new units at a price of S$1.055 per unit to partly fund the acquisition of its second property in New York, Sheraton Tribeca New York Hotel, in April 2016.
Mr Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “Ascott Reit performed strongly with higher distributable income and DPU. We continued to achieve double-digit growth in revenue due to our S$609 million acquisitions last year and the recent acquisition in New York for S$218 million. Our entry into the U.S. last year not only propelled Ascott Reit into a global hospitality player, our two U.S. acquisitions were the biggest contributors to revenue growth. We completed the acquisition of our second property in New York in 2Q, boosting our asset size to about S$5.0 billion.”
“We made our appearance in March 2006 as the first hospitability REIT with just 12 properties comprising 2,068 apartment units in seven cities and five countries with an asset size of S$856 million. Ten years on, Ascott Reit has become the most diversified REIT in Singapore with 90 properties and 11,649 apartment units across 38 cities and 14 countries. Ascott Reit is also the largest hospitality REIT in Singapore by asset size. Our asset size will expand to S$5.3 billion when the acquisition of Ascott Orchard Singapore is completed, which is expected to be in 2017.”
Mr Lim said: “As we mark our 10th year anniversary this year, we remain committed to deliver stable and growing returns to Unitholders. We will continue to seek accretive acquisitions in gateway cities in markets such as Australia, Japan, Europe and the U.S. to enhance our portfolio and achieve our target asset size of S$6 billion by 2017.”
Mr Ronald Tay, ARTML’s Chief Executive Officer, said: “Japan was the top performing market in 2Q with RevPAU increasing 9% 1 due to stronger demand from leisure travellers for our serviced residences. Spain also saw a 4% 1 growth in RevPAU because of higher demand from leisure travellers at Citadines Ramblas Barcelona.”
Commenting on Brexit, Mr Tay said: “Ascott Reit’s portfolio in Europe is well-diversified across the UK, France, Germany, Belgium and Spain. Our properties in the UK are in London and these assets form only 10.2% of Ascott Reit’s total gross profit for 1H 2016. Our London properties are on management contracts with a minimum guaranteed income, giving Ascott Reit a stable income. We are closely monitoring the situation, keeping in mind that the formalisation of Brexit will take at least two years. While businesses may reduce corporate travel as they evaluate their options, we expect an increase in leisure travellers if the pound continues to remain affordable. We take a long term view of the markets and believe that London will continue to remain a key global city.”
“The performance of our other properties in Europe is also stable as the properties in France and Germany are underpinned by master leases, and the properties in Belgium and Spain are on management contracts with minimum guaranteed income.”
Mr Tay added: “We continue to actively manage our portfolio of properties to maximise returns. The final phase of refurbishment at Somerset Xu Hui Shanghai was completed in June 2016 and the first phase of renovation at Ascott Makati is on track for completion this year. We expect to complete the refurbishment at Citadines Barbican London and Somerset Ho Chi Minh City in 2017. We will also continue to be prudent in our capital management by tapping the debt capital market to diversify our funding sources and securing longer term financing at an optimal cost. Currently, 80% of our total borrowing is on fixed interest rates which will mitigate interest rate volatility.”
Summary of Results
Revenue for 2Q 2016 increased mainly due to the additional revenue of S$27.8 million from Ascott Reit’s acquisitions in 2015 and 2016. The increase was partially offset by the decrease in revenue of S$0.8 million from the divestment of six rental housing properties in Japan in 3Q 2015 and a decrease in revenue of S$6.3 million from the existing properties.
Unitholder’s distribution in 2Q 2016 included a realised exchange gain of S$3.5 million arising from repayment of foreign currency bank loans with the divestment proceeds from Fortune Garden Apartments.
RevPAU grew 10% because of the acquisitions in 2015 and 2016.
1H 2016 vs. 1H 2015
Revenue for 1H 2016 increased mainly due to the additional revenue of S$44.3 million from Ascott Reit’s acquisitions in 2015 and 2016. The increase was partially offset by the decrease in revenue of S$1.7 million from the divestment of six rental housing properties in Japan and a decrease in revenue of S$6.4 million from the existing properties.
Unitholder’s distribution in 1H 2016 included a realised exchange gain of S$3.5 million arising from repayment of foreign currency bank loans with the divestment proceeds from Fortune Garden Apartments.
RevPAU grew 10% because of the acquisitions in 2015 and 2016.
Ascott Reit makes distributions to Unitholders on a semi-annual basis, with the amount calculated as at 30 June and 31 December each year.
Following Ascott Reit’s equity placement on 14 March 2016, Ascott Reit declared an advanced distribution of 1.585 cents per unit based on the period of 1 January 2016 to 22 March 2016, which was paid on 27 April 2016.
For the period of 23 March 2016 to 30 June 2016, Unitholders will receive their distribution of 2.290 cents per unit on 24 August 2016.